Economy. The Canadian Couche-Tard wants to get closer to Carrefour


The French retail giant Carrefour was asked by the Canadian food company Couche-Tard for a 'rapprochement', the two companies said in separate press releases on Tuesday. 'The discussions are very preliminary,' Carrefour said at the time.

According to a press release on Wednesday, the Canadian Couche-Tard 'Carrefour recently submitted a non-binding letter of intent with a view to a friendly merger', based on a price of 20 euros per share, which leaves the French distributor with more than 16 billion euros without debt.

'No certainty'

'There is no assurance' that these discussions 'will lead to an agreement or an operation,' Couche-Tard said in his press release. In an internal communication to the Carrefour group, the French distributor states that he 'will examine the project presented to him by Alimentation Couche-Tard'.

The interest of the Canadian group Couche-Tard in Carrefour was surprising, but this possible 'merger' would have logic, according to industry experts.

No risk of cannibalization between the two groups

On the one hand, a proponent of the 'convenience store' format, small shops often supported by gas stations, mainly in North America and a little in Northern Europe. On the other hand, a giant of supermarkets installed especially in France, southern and eastern Europe and in Brazil.

Its difficult to be more dissimilar a priori than Couche-Tard, who makes a large portion of its revenue from selling fuels (around 70{7d3485657e94c2a51293ca186d4450b2f27c317aa7ee3509dac6c8bbf5461118}), and Carrefour, a grocery retailer. 'There is no geographical overlap or format between the two parts,' summarized Jefferies analysts in a note on Wednesday. Advantage: This avoids any 'risk of cannibalization' a priori, said Yves Marin, an expert in the sales sector at Bartle.

A merger would also have no a priori impact on employment and would not pose a concentration or competition problem.

Fight against Amazon?

But the coin has a downside: If 'Couche-tard is certainly betting on commercial synergies with a better network in the territory', analyzes Clément Genelot, specialist in the distribution sector at Bryan, Garnier & Co, he is doubtful about the 'added value' of such a network Surgery. 'We dont see any synergies in the supply chain or in logistics,' adds Yves Marin in the event of a merger.

Couche-Tards weight in gasoline distribution would allow buying fuels to be considered internationally, but 'economies of scale have shown their limits in the distribution business'.

Another factor could explain the desire to bring merchants together, according to another specialist in the industry who wants to remain anonymous: 'Given Amazon and others, the volume of investment in logistics and technological capacity is enormous, so there is an obligation to find a form of this Allianz, beyond buying synergies '.

On the initiative of the Canadian

If, at a very tentative stage, the two brands spoke of a 'rapprochement' and a 'friendly' operation, it is the Quebec Group that celebrated its 40th anniversary in 2020 that goes on initiative.

'You have a desire to expand and are committed to the logic of comprehensive growth,' says Yves Marin. The group has indeed grown in this way: it established itself in the USA in the early 2000s through the acquisition of smaller competitors, and in Northern Europe in 2012 with the acquisition of the Norwegian group Statoil for 2.8 billion US dollars.

The group of more than 130,000 employees also made a noticeable entry into the Asian market in November and bought the Hong Kong group Convenience Retail Asia for almost 360 million US dollars. 'However, he has never been to mergers of this size,' notes Clément Genelot.

What interest in Carrefour?

For Carrefour, such an operation would 'make it possible to find bundles of growth through Allianz,' notes Yves Marin, and make it possible to prop up the share price.

At the end of October, the group, which had just bought the specialist dealer Bio CBon in France, communicated a 'dynamic' third quarter of 2020 with sales that were above market expectations. But it remains less well-rated on the stock market than Couche-Tard.